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Audit Commission chief calls for cuts to public sector pensions

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All public sector pension schemes must be reviewed amid the public finance shortfalls, the chief executive of the Audit Commission has said.

Steve Bundred’s comments were made at the Conservative Party conference in Manchester and followed a speech by the shadow chancellor George Osborne in which he said he would raise the state pension age from 65 to 66 in 2016 and cap public sector pension pay outs at £50,000 a year.

Mr Osborne also indicated further reforms could be afoot, saying a Conservative government would not have “one rule for Westminster and Whitehall and another rule for everyone else,” before setting out his pledge to cut ministerial pay by 5 per cent next year and to close its “unaffordable pension scheme” to new members.

Mr Bundred said it was right that public sector pensions – both funded schemes and unfunded schemes were “reviewed”. He said final salary schemes were particularly problematic as the member’s contributions were not large enough to cover them. Instead the schemes should look to moving pay-outs to average salary levels, he said.

But he was clear it would be “unfair” to retrospectively change the terms of existing pension scheme members. That meant the government “must not expect to make a big saving in the short term,” through pension scheme reform.

Asked if the government should continue to implement the recommendations of the independent pay review bodies, Mr Bundred said: “Those are political choices for politicians to make. That’s what we have politicians for.” The comment followed Monday’s news that the Treasury had told the pay review bodies it wanted to freeze senior public sector pay from April next year.

Mr Bundred has been pushing for several months for greater openness about the scale of public spending restraint needed to cope with the UK’s public debt and budget deficit. But he said recent statements by politicians from both the government and the opposition about the need for “cuts” and “savings” had “encouraged” him.

But he said there was no way to “soften” the message and impact of the cut backs required. “You cannot pretend you are not doing the things you are doing,” he said. He said the consolation for the government and public sector was that even if “huge sums” were taken out of public spending over the next few years, spending growth in the recent past meant that would still leave budgets at a similar level previous levels.


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